Gores adds to European portfolio

The firm has purchased German automotive supplier The Hay Group, the first European investment in what Gores expects to be an ‘active year’ in Europe, according to Gores managing director Fernando Goni.

The Gores Group has agreed its first deal of 2012, investing an undisclosed amount in German automotive product-maker The Hay Group.

The company manufactures components for passenger and commercial vehicles and has long term relationships with automotive companies including Volkswagen and Daimler, Gores Group managing director Fernando Goni told Private Equity International.

“They also supply strategic products to these customers, so that made it very compelling to us,” he said.

Gores is expecting to see a significant amount of attractive opportunities in Europe in 2012, Goni added.

“There might be an element of attractive values given the uncertainty, but we’re coming more from a [perspective] of, there are going to be interesting opportunities which will require operational expertise and that’s where we would play,” he said. “We’re going to be active in Europe this year.”

The firm is also expecting strong growth in Hay’s specific sector.

“We see that kind of growth in the German original equipment manufacturing space,” Gores managing director Igor Chacartegui said. “They had a record year in 2011 and more importantly they’re seeing strong growth in 2012. A lot of that is driven by emerging markets.”

Hay’s products are manufactured in Germany and then shipped all across the world, he added, and Gores has plans to expand abroad and look for add-on acquisitions.

“We should be able to see other opportunities that can complement this company,” Chacartegui said.

Gores invested in The Hay Group from its third fund that closed on $2 billion in February. Gores Capital Partners III will complete 12 to 20 transactions, investing $50 million to $250 million in distressed companies in the information technology, telecom, industrial, media, healthcare and security sectors.

The firm is currently in market with its first small-cap fund, Gores Small Capitalisation Partners, which has a $300 million target and hard-cap.

Gores Group was founded in 1987 by chief executive officer Alec Gores. The firm oversees $3.8 billion in capital commitments across its three buyout funds.